Here’s how much MN lawmakers spent on welfare in 2023
Minnesota’s welfare system underwent significant expansion last year. This post is a breakdown of all the new spending that happened last year.
As American Experiment’s most recent report notes, welfare spending in Minnesota was already expected to grow before the 2023 legislative session. Minnesota Management and Budget (MMB) estimated in February 2023 that Health and Human Services (HHS) was going to cost $18 billion of general funds in the 2024-25 biennium (or the current biennium). Looking further into the horizon, MMB estimated HHS to total $20 billion in the 2026-27 biennium.
Here is what happened in the session, however.
HHS spending in the 2023 session
At the commencement of the 2023 legislative session, Minnesota had an $18 billion surplus. Some of this money was given back to Minnesotans through rebate checks. The income at which social security income is exempt from taxation was also expanded. Furthermore, lawmakers created the child tax credit.
However, the majority of the surplus was spent on existing and new programs. According to Senate Fiscal tracking produced at the end of the session, lawmakers approximately spent $4.8 billion in new general funds on HHS. However, final estimates published by MMB put those numbers a little higher, with HHS spending growing by $5.2. billion by the end of the session.
Spending grew $2.8 billion in the 2024-25 biennium compared to what it was pegged at in the 2023 February forecast. Spending grew by $2.4 billion in the 2026-27 biennium compared to what it was in the February forecast.
Lawmakers, however, also spent funds from other sources outside of general funds. In the 2023 legislative session, for example, well over $1 billion in new HHS spending also came from the Health Care Access Fund (HCAF). Some funds were appropriated from federal TANF dollars and other special revenue funds.
Here is how some of those new dollars were divided:
Overall, the Department of Human Services was the biggest spending category getting nearly 90 percent of all spending. Money spent on the Department of Human Services went to some of the following welfare programs.
Medicaid
Medicaid was the single biggest spending category, getting over $2 billion in new general funds. Lawmakers passed the following laws which increased Medicaid spending:
- Raised reimbursement rates for providers and caretakers
- Eliminated cost-sharing “including for high-income parents of disabled children who enroll in Medicaid under the Tax Equity and Fiscal Responsibility Act (TEFRA) option.
- Reinstated comprehensive dental coverage for adults
- Provides continuous Medicaid eligibility (ergo coverage) for children up to 21 years old. Federal law passed in 2022 requires states to provide continuous coverage for children up to 19. Minnesota law goes beyond that.
- Provides continuous eligibility (ergo coverage) to children who qualify for Medicaid up until they reach age 6.
Childcare Assistance
After Medicaid, childcare was the next biggest spending category getting over $1 billion in new funds. Of that money,
Over half a billion dollars will go to the MFIP and basic sliding fee programs to increase reimbursement rates for providers and expand eligibility for childcare assistance to foster caregivers and relative caregivers. Childcare providers will also get over half a billion dollars in the next four years from what is termed “Great Start Compensation Payments.
Cash Assistance programs
Lawmakers also dedicated over $100 million in new funds to cash assistance programs by increasing benefits and loosening eligibility criteria, among other things.
Newly enacted legislation, for example, adjusts housing assistance benefits under MFIP for the cost of living, increasing the cost of the program. Certain types of incomes are also excluded from consideration in eligibility determinations for cash and childcare assistance. These include Retirement, Survivors, and Disability Insurance (RSDI) benefits and tribal per capita payments.
Currently, hard-to-employ MFIP beneficiaries who have exhausted their 60-month lifetime limit must comply with MFIP requirements in their 60th month on the program, as well as “develop and comply with either an employment plan or a family stabilization services plan” to qualify for a hardship extension. Beginning May 2026, only the latter condition will apply. Furthermore, penalties associated with noncompliance regarding work and training requirements in the MFIP program have also been significantly reduced, effective May 2026. Recipients enrolled in MFIP, GA, and housing support programs will shift from monthly to semiannual income reporting.
Other programs
Various programs (new and old) also got money in 2023. Some of those programs include:
- Emergency services Program
- Transitional Housing Program
- Homeless Youth program
- Safe harbor (Shelter and Housing)
- Family First Prevention Services Act
- American Indian Child Welfare
- Minnesota Food Shelf program
- Family Assents for Independence in Minnesota (FAIM)
- Indian Child Welfare grants
- Mobile Crisis grants
- Cultural and Ethnic Minority Infrastructure grants
- Housing Support
- MinnesotaCare: “Starting in 2026, undocumented immigrants can enroll in MinnesotaCare — a program that subsidizes health insurance for low-income people. In the budget, this will cost about $110 million between FY 2024 and FY 2027.”
- Community Action grants
- Homeless Youth Cash Stipend Project
- Family Supportive Housing
- Homelessness programs in Hennepin County
- Grants to Promote Local Planning for Climate Resiliency
- Community Health Worker Alliance
- Community Solutions Grant Program
- Family Planning Special Projects
- Healthy Beginnings, Healthy Families Grant Program
The list goes on and on.
Unbudgeted expenditures
Beyond spending new money, lawmakers also passed laws that will create other spending programs in the future. The two main ones for HHS include:
- Public option: This will expand MinnesotaCare to eligible individuals with incomes over 200 percent of federal poverty.
- Great Start Scholarship program: This program would cap childcare costs for families at 7 percent of family income for all families, costs to be paid for by the state.
Currently, both of these two programs are under discussion in the 2024 legislative session. Bills have been proposed setting the state for the actualization of both programs.
The bottom line
overall, 2023 marked a significant expansion in Minnesota’s government. Nowhere is that more evident than what happened with welfare spending. Lawmakers added over $6 billion in HHS spending, creating an all-around bigger welfare system in Minnesota.